Navigating the unpredictable waters of today’s market, safe dividend stocks emerge as a beacon of reliability. Despite an optimistic kickoff this year, the broader market sentiment has chilled. For investors eager to remain engaged but wary of current volatilities, turning to trusted companies offering consistent dividends might be the savvy move.
Recent data adds weight to this strategy. Recently, CNBC highlighted that August’s core inflation, excluding food and energy, edged up by 0.3%, exceeding projections. The consumer price index notched its most significant monthly uptick of the year, rising by 0.6%. In the same vein, energy prices jumped, underscored by a substantial 10.6% leap in gasoline costs. Meanwhile, real average hourly earnings slipped by 0.5%, signaling potential constraints on discretionary spending.
Compounding matters, the previously bullish technology sector has shown signs of waning momentum, prompting broader market apprehension. The writing’s on the wall. Amid brewing financial tempests, considering dividend stocks to buy for safety could be your financial umbrella.
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Amid the rough waters of the equities sector recently, Shell (NYSE:SHEL) emerges as a lighthouse for the discerning investor. As an integrated oil and natural gas enterprise, combining both upstream (exploration and production) and downstream (refining and marketing) business units, Shell offers vast relevanceis.
It also demonstrates comparatively strong performance stats. While the S&P 500 took tentative steps, growing a mere 1% in the trailing month, Shell charged forth with an almost 7% uptick. Let’s face it, even with the push toward electrification, most of us still rely on combustion-powered transportation.
Better yet, Shell – while not exactly printing extraordinarily remarkable financials – is a reliable entity among safe dividend stocks. In particular, it benefits from consistent profitability. Also, it trades at only 5.21X free cash flow (FCF), lower than almost 70% of its peers.
And let’s not forget about dividends. With a robust 4.1% forward yield and a commendably conservative payout ratio, Shell combines a mix of passive income and capital gains potential. As a bonus, analysts rate SHEL a strong buy with a $69.31 target implying over 7% upside potential.
Rio Tinto (RIO)
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Metals and mining? For dividend safety? Before you raise a skeptical brow, allow Rio Tinto (NYSE:RIO) to make its case. The year’s equity dip, while noticeable, will probably be but a transient blip over Rio’s longer-term narrative. Why? Two words: copper and lithium.
As the world accelerates toward an electric future, Rio Tinto is strategically poised to harness the surging demand for these indispensable metals. According to Grand View Research, the global lithium market was valued at $7.49 billion in 2022.
Further, the sector should grow at a compound annual growth rate (CAGR) of 12.3% from 2023 to 2030, culminating in sector revenue of $18.99 billion. That’s one good reason why RIO is one of the safe dividend stocks.
In fairness, its equity value stuttered this year. Still, remember this: a stellar 30% trailing-year operating margin doesn’t just manifest overnight. It’s forged from consistent excellence and resilience. Add a forward yield of 5.38% into the mix, and the narrative is clear: Rio Tinto is a dividend dynamo, awaiting its rightful spotlight among dividend stocks to buy for safety.
Johnson & Johnson (JNJ)
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In the realm of safe dividend stocks, few names carry the gravitas and time-tested resilience of Johnson & Johnson (NYSE:JNJ). This healthcare behemoth, despite a 9% slip since the year’s onset, remains a bedrock for investors seeking stability amid market volatility. And in these uncertain times, there’s an undeniable allure to the predictable and the familiar.
J&J’s recent spinoff of Kenvue (NYSE:KVUE) has strategically allowed it to focus on pharmaceutical prescription drugs and cutting-edge medical device technologies. In an age of rapid medical advancements, J&J’s commitment to innovation ensures its relevance for decades to come. Amid global health challenges, patients will seek and prioritize solutions irrespective of broader economic considerations.
However, it’s not just about the present but the future. Consistent profitability, an enviable operating margin surpassing 91% of industry counterparts and an unbroken 62-year streak of dividend increases underscore J&J’s prowess. With analysts forecasting a nearly 11% upside potential, J&J isn’t just a stable bet; it’s a compelling growth prospect, making it one of the dividend stocks to buy for safety.
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Venture a bit deeper into the pharmaceutical space and you’ll stumble upon another dividend darling: AbbVie (NYSE:ABBV). By acquiring Allergan, this powerhouse did not just expand its portfolio; it strategically positioned itself at the forefront of an aesthetic revolution. In an era dominated by social media perfectionism, the Botox antiwrinkle treatment could very well be the golden goose for AbbVie, making it one of the safe dividend stocks.
The societal shift, especially among millennials and Generation Z, is undeniable. As notions of aging evolve, driven in part by the unforgiving lens of social media, treatments like Botox find a growing audience. The demand isn’t tethered to economic upswings; it’s a new norm, unaffected by recessions or downturns.
AbbVie’s financials echo this optimistic narrative. A three-year revenue growth rate besting 72% of its industry peers, a net margin towering above 81% and a forward dividend yield of 3.89% paint a promising picture. With over half a century of consecutive dividend hikes and analysts signaling an 11% upside, AbbVie makes a compelling case for those scouting for dividend stocks to buy for safety.
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In a world increasingly enticed by premium coffee shops and artisanal drinks, there’s a quieter, powerful countermovement: the allure of cost-effectiveness. Take PepsiCo (NASDAQ:PEP) for instance, a familiar face in food, snacks and beverages.
As economic uncertainty looms and wallets tighten, a growing number of consumers could choose to bypass the posh cafés. Instead, they might reach for their trusted can of Pepsi, getting that caffeine kick at a fraction of the price. It’s an observation grounded in the trade-down effect, where consumers, instead of abandoning a habit, find more economical alternatives.
While PEP stock hasn’t had the most thrilling year, it’s crucial not to underestimate its potential. Beyond the name recognition, PepsiCo’s financials shine in places that matter. A three-year revenue growth rate of 9.3% outpaces 70% of its industry counterparts. Couple that with robust operating and net margins of 13.35% and 8.76% respectively, and you’ve got a stock showing resilience and adaptability.
Now, for those with an eye on safe dividend stocks, PEP doesn’t disappoint. Boasting a forward yield of 2.81% and an admirable streak of 52 years of consecutive dividend hikes, it’s a testament to the company’s commitment to rewarding shareholders.
Philip Morris (PM)
When it comes to dividend investing, some sectors are inherently divisive, and Philip Morris (NYSE:PM) from the tobacco world is no exception. The company, though a dominant player in its sector is now operating in a world where traditional smoking is steadily declining.
But here’s the twist: Philip Morris isn’t just any old tobacco company. Leveraging its vast knowledge of the industry, it’s making a strategic pivot towards e-cigarettes and vaporizers, creating products tailored for traditional smokers transitioning to these alternatives.
Yes, a peek into the financials reveals certain imperfections. Its balance sheet and revenue growth trajectory have room for improvement. And its premium valuation might raise eyebrows. But focus on its robust operating margin of 33.6% and a commendable return on assets of 15%. These figures are indicative of a company that knows its craft and continues to navigate challenges deftly.
Dividend enthusiasts should note its attractive forward yield of 5.43%. Admittedly, its payout ratio sits at a steep 76.34%. But with 15 years of consistent dividend hikes and a unanimous strong buy rating from analysts, PM is staking its claim in the world of safe dividend stocks, with a price target suggesting a promising 22% upside.
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Amid the cacophony of the United Auto Workers strike, Stellantis (NYSE:STLA) — the powerhouse behind revered brands like Alfa Romeo and Maserati — finds itself in a delicate dance. With ownership of domestic giants like Dodge, the strike undoubtedly casts a shadow.
But look beyond the immediate turbulence and you might see an undervalued gem, especially when you consider its electric vehicle aspirations. With such an illustrious portfolio of iconic brands, the EV transition is peppered with tantalizing possibilities.
From a valuation standpoint, Stellantis distinguishes itself. Trading at a modest forward earnings multiple of 3.26X, it represents a stark contrast to its peers. Its discounted revenue multiple further accentuates the value proposition. But the story gets even juicier when you consider its three-year revenue growth rate of 14.6%, which not only outpaces most in the sector but pairs beautifully with an enviable EBITDA growth rate of 32.2%.
Dividend hunters, brace yourselves. STLA offers a staggering 7.16% yield. With analysts echoing a robust strong buy sentiment and hinting at a potential 25% price appreciation, Stellantis solidifies its stance as one of the compelling dividend stocks to buy for safety amid market volatility.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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